HB386INTRODUCED
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HB386
L7HRAYA-1
By Representatives Garrett, Stadthagen, Colvin, Brinyark,
Kirkland, Marques, Sorrells, Rehm, Whorton, Paschal, Smith,
Shaw, Butler, Estes, Moore (P), Robertson, Lipscomb, Wilcox,
Harrison, Hammett, Pettus, Easterbrook, Stubbs, Starnes,
Standridge, Carns, Holk-Jones, Givens, Underwood, Ross,
Mooney, Ingram, Baker, Treadaway, Sells, Rigsby, Yarbrough,
Woods, DuBose, Lovvorn, Lamb, Gidley, Shirey, Fidler, Hulsey,
Lomax, Ledbetter, Hurst, Kiel
RFD: Ways and Means Education
First Read: 05-Mar-25
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12 L7HRAYA-1 02/25/2025 KHF (F)KHF 2025-34
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First Read: 05-Mar-25
SYNOPSIS:
Under existing law, the state imposes sales or
use taxes upon certain persons, firms, or corporations
at a general rate of four percent. Sales of certain
items are taxed at a reduced rate, including food,
which is taxed at three percent.
This bill would reduce the sales and use tax
rate on food to two percent, on September 1, 2025.
A BILL
TO BE ENTITLED
AN ACT
Relating to sales taxes; to amend Sections 40-23-2 and
40-23-61, Code of Alabama 1975, to reduce the state sales and
use tax rate on food to two percent on September 1, 2025.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 40-23-2 and 40-23-61, Code of
Alabama 1975, are hereby amended as follows:
"§40-23-2
There is levied, in addition to all other taxes of
every kind now imposed by law, and shall be collected as
herein provided, a privilege or license tax against the person
on account of the business activities and in the amount to be
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on account of the business activities and in the amount to be
determined by the application of rates against gross sales, or
gross receipts, as the case may be, as follows:
(1) Upon every person, firm, or corporation, (including
the State of Alabama and its Alcoholic Beverage Control Board
in the sale of alcoholic beverages of all kinds, the
University of Alabama, Auburn University, and all other
institutions of higher learning in the state, whether the
institutions be denominational, state, county, or municipal
institutions, any association or other agency or
instrumentality of the institutions) engaged or continuing
within this state, in the business of selling at retail any
tangible personal property whatsoever, including merchandise
and commodities of every kind and character, (not including,
however, bonds or other evidences of debts or stocks, nor
sales of material and supplies to any person for use in
fulfilling a contract for the painting, repair, or
reconditioning of vessels, barges, ships, other watercraft,
and commercial fishing vessels of over five tons load
displacement as registered with the U.S. Coast Guard and
licensed by the State of Alabama Department of Conservation
and Natural Resources) an amount equal to four percent of the
gross proceeds of sales of the business except where a
different amount is expressly provided herein. Provided,
however, that any person engaging or continuing in business as
a retailer and wholesaler or jobber shall pay the tax required
on the gross proceeds of retail sales of the business at the
rates specified, when his or her books are kept so as to show
separately the gross proceeds of sales of each business, and
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separately the gross proceeds of sales of each business, and
when his or her books are not kept he or she shall pay the tax
as a retailer, on the gross sales of the business.
Where any used part including tires of an automotive
vehicle or a truck trailer, semitrailer, or house trailer is
taken in trade, or in a series of trades, as a credit or part
payment on the sale of a new or rebuilt part or tire, the tax
levied herein shall be paid on the net difference, that is,
the price of the new or used part or tire sold less the credit
for the used part or tire taken in trade, provided, however,
this provision shall not be construed to include batteries.
(2) Upon every person, firm, or corporation engaged or
continuing within this state in the business of conducting or
operating places of amusement or entertainment, billiard and
pool rooms, bowling alleys, amusement devices, musical
devices, theaters, opera houses, moving picture shows,
vaudevilles, amusement parks, athletic contests, including
wrestling matches, prize fights, boxing and wrestling
exhibitions, football and baseball games, (including athletic
contests, conducted by or under the auspices of any
educational institution within this state, or any athletic
association thereof, or other association whether the
institution or association be a denominational, a state, or
county, or a municipal institution, or association or a state,
county, or city school, or other institution, association or
school) skating rinks, race tracks, golf courses, or any other
place at which any exhibition, display, amusement, or
entertainment is offered to the public or place or places
where an admission fee is charged, including public bathing
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where an admission fee is charged, including public bathing
places and public dance halls of every kind and description
within the State of Alabama, an amount equal to four percent
of the gross receipts of any such business. Provided, however,
notwithstanding any language to the contrary in the prior
portion of this subdivision, the tax provisions so specified
shall not apply to any athletic event conducted by a public or
nonpublic primary or secondary school or any athletic event
conducted by or under the auspices of the Alabama High School
Athletic Association. The tax amount which would have been
collected pursuant to this subdivision shall continue to be
collected by the public or nonpublic primary or secondary
school, but shall be retained by the school that collected it
and shall be used by the school for school purposes.
(3) Upon every person, firm, or corporation engaged or
continuing within this state in the business of selling at
retail machines used in mining, quarrying, compounding,
processing, and manufacturing of tangible personal property an
amount equal to one and one-half percent of the gross proceeds
of the sale of the machines. The term "machine," as herein
used, shall include machinery which is used for mining,
quarrying, compounding, processing, or manufacturing tangible
personal property, and the parts of the machines, attachments,
and replacements therefor, which are made or manufactured for
use on or in the operation of the machines and which are
necessary to the operation of the machines and are customarily
so used.
(4) Upon every person, firm, or corporation engaged or
continuing within this state in the business of selling at
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continuing within this state in the business of selling at
retail any automotive vehicle or truck trailer, semitrailer,
or house trailer, or mobile home set-up materials and supplies
including but not limited to steps, blocks, anchoring, cable
pipes, and any other materials pertaining thereto, an amount
equal to two percent of the gross proceeds of sale of the
automotive vehicle or truck trailer, semitrailer, or house
trailer, or mobile home set-up materials and supplies
provided, however, where a person subject to the tax provided
for in this subdivision withdraws from his or her stock in
trade any automotive vehicle or truck trailer, semitrailer, or
house trailer for use by him or her or by his or her employee
or agent in the operation of the business, there shall be
paid, in lieu of the tax levied herein, a fee of five dollars
($5) per year or part thereof during which the automotive
vehicle, truck trailer, semitrailer, or house trailer shall
remain the property of the person. Each year or part thereof
shall begin with the day or anniversary date, as the case may
be, of such withdrawal and shall run for the 12 succeeding
months or part thereof during which the automotive vehicle,
truck trailer, semitrailer, or house trailer shall remain the
property of the person.
Where any used automotive vehicle or truck trailer,
semitrailer, or house trailer is taken in trade or in a series
of trades, as a credit or part payment on the sale of a new or
used vehicle, the tax levied herein shall be paid on the net
difference, that is, the price of the new or used vehicle sold
less the credit for the used vehicle taken in trade.
Sales of automobiles, motorcycles, trucks, truck
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Sales of automobiles, motorcycles, trucks, truck
trailers, travel trailers, campers, housecars, or semitrailers
that will be registered or titled outside Alabama, that are
exported or removed from Alabama within 72 hours by the
purchaser or his or her agent for first use outside Alabama
are subject to Alabama sales tax in an amount equal to only
the state automotive sales tax rate, unless the sales tax laws
of the state in which the purchaser will title or register the
vehicle allows an Alabama resident to purchase a motor vehicle
for first titling and registering in Alabama without the
payment of tax to that state. However, in no case shall the
amount of Alabama state sales tax due on a motor vehicle that
will be registered or titled for use in another state exceed
the amount of sales tax that would otherwise have been due in
the state where the vehicle will be registered or titled for
first use. In order to qualify as a travel trailer, camper, or
housecar that will be registered or titled for use in another
state, the purchaser must provide documentation to the seller
that the purchaser is not a resident of Alabama as required by
the Department of Revenue. No such proof is required in the
sale of an automobile, motorcycle, truck, truck trailer, or
semitrailer, excluding a travel trailer, camper, or housecar.
The tax collected under this export provision shall be Alabama
sales tax and shall exclude county and municipal sales tax. On
January 1, 2016, and each January 1 thereafter, the Alabama
Department of Revenue shall publish to the state's website a
list of states that do not allow drive out provisions to
Alabama residents. Should the list, required by this
subsection and relied upon by the taxpayer, be incorrect, the
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subsection and relied upon by the taxpayer, be incorrect, the
taxpayer shall be relieved from the liability concerning the
miscollection of the state automotive sales tax. Sales of all
other vehicles such as mobile homes, motor bikes, all terrain
vehicles, and boats do not qualify for the export exemption
provision and are taxable unless the dealer can provide
factual evidence that the vehicle was delivered outside of
Alabama or to a common carrier for transportation outside
Alabama. In order for the sale to be exempt from Alabama tax,
the information relative to the exempt sale shall be
documented on forms approved by the Revenue Department.
Of the total $.02 tax on each dollar of sale provided
hereunder, 58 percent of the total tax generated by this
subdivision (4) shall be deposited to the credit of the
Education Trust Fund and 42 percent of the total tax generated
by this subdivision (4) shall be deposited to the credit of
the State General Fund.
(5) Upon every person, firm, or corporation engaged or
continuing within this state in the business of selling
through coin-operated dispensing machines, food and food
products for human consumption, not including beverages other
than coffee, milk, milk products, and substitutes therefor,
there is levied a tax equal to three percent of the cost of
the food, food products, and beverages sold through the
machines, which cost for the purpose of this subdivision shall
be the gross proceeds of sales of the business.
(6) Upon every person, firm, or corporation engaged or
continuing within this state in the business of selling food
as defined in Section 40-23-1, there is a tax levied equal to
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as defined in Section 40-23-1, there is a tax levied equal to
four percent of the gross proceeds of the sale of food. On
September 1, 2023, the tax rate shall be reduced to three
percent. On September 1, 20242025, the tax rate shall be
reduced to two percent , if the average of the estimated growth
in the total net receipts from all revenue sources to the
Education Trust Fund for the fiscal year ending September 30,
2025, as certified by the Director of Finance and the
Legislative Fiscal Officer, respectively, pursuant to Section
260.02 of the Constitution of Alabama of 2022, is at least
three and one-half percent higher than the previous fiscal
year. If the growth requirement is not satisfied for the
fiscal year ending September 30, 2025, the rate shall be
reduced to two percent in a subsequent fiscal year when the
growth requirement is satisfied ."
"§40-23-61
(a) An excise tax is hereby imposed on the storage,
use, or other consumption in this state of tangible personal
property, not including, however, materials and supplies
bought for use in fulfilling a contract for the painting,
repairing or reconditioning of vessels, barges, ships, other
watercraft and commercial fishing vessels of over five tons
load displacement as registered with the U.S. Coast Guard and
licensed by the State of Alabama Department of Conservation
and Natural Resources, purchased at retail on or after October
1, 1965, for storage, use or other consumption in this state
at the rate of four percent of the sales price of the property
or the amount of tax collected by the seller, whichever is
greater; provided, however, when the seller follows the
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greater; provided, however, when the seller follows the
Department of Revenue's suggested use tax brackets and his or
her records prove that his or her following the brackets
resulted in a net undercollection of tax for the month, he or
she may report the tax due or tax collected, whichever is
less, except as provided in subsections (b), (c), and (d).
(b) An excise tax is hereby imposed on the storage,
use, or other consumption in this state of any machines used
in mining, quarrying, compounding, processing, and
manufacturing of tangible personal property, purchased at
retail on or after October 1, 1965, at the rate of one and
one-half percent of the sales price of any such machine or the
amount of tax collected by the seller, whichever is greater;
provided, however, when the seller follows the Department of
Revenue's suggested use tax brackets and his or her records
prove that his or her following the brackets resulted in a net
undercollection of tax for the month, he or she may report the
tax due or tax collected, whichever is less; provided, that
the term "machine," as used in this subsection, shall include
machinery that is used for mining, quarrying, compounding,
processing, or manufacturing tangible personal property, and
the parts of such machines, attachments, and replacements
therefor, which are made or manufactured for use on or in the
operation of such machines and which are necessary to the
operation of such machines and are customarily so used.
(c)(1) An excise tax is hereby imposed on the storage,
use or other consumption in this state of any automotive
vehicle or truck trailer, semitrailer or house trailer, and
mobile home set-up materials and supplies including but not
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mobile home set-up materials and supplies including but not
limited to steps, blocks, anchoring, cable pipes and any other
materials pertaining thereto, purchased at retail on or after
October 1, 1965, for storage, use, or other consumption in
this state at the rate of two percent of the sales price of
such automotive vehicle, truck trailer, semitrailer or house
trailer, and mobile home set-up materials and supplies as
specified above, or the amount of tax collected by the seller,
whichever is greater; provided, however, when the seller
follows the Department of Revenue's suggested use tax brackets
and his or her records prove that his or her following the
brackets resulted in a net undercollection of tax for the
month, he or she may report the tax due or tax collected,
whichever is less. Where any used automotive vehicle or truck
trailer, semitrailer, or house trailer is taken in trade, or
in a series of trades, as a credit or part payment on the sale
of a new or used vehicle, the tax levied herein shall be paid
on the net difference, that is, the price of the new or used
vehicle sold less the credit for the used vehicle taken in
trade.
(2) Of the total $.02 tax on each dollar of sale
provided in this subsection, 58 percent of the total tax
generated by this subsection shall be deposited to the credit
of the Education Trust Fund; and 42 percent of the total tax
generated by this subsection shall be deposited to the credit
of the State General Fund.
(d) An excise tax is hereby imposed on the storage,
use, or other consumption in this state of food as defined in
Section 40-23-60, at the rate of four percent of the sales
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Section 40-23-60, at the rate of four percent of the sales
price of such food. On September 1, 2023, the tax rate shall
be reduced to three percent. On September 1, 20242025, the tax
rate shall be reduced to two percent , if the average of the
estimated growth in the total net receipts from all revenue
sources to the Education Trust Fund for the fiscal year ending
September 30, 2025, as certified by the Director of Finance
and the Legislative Fiscal Officer, respectively, pursuant to
Section 260.02 of the Constitution of Alabama of 2022, is at
least three and one-half percent higher than the previous
fiscal year. If the growth requirement is not satisfied for
the fiscal year ending September 30, 2025, the rate shall be
reduced to two percent in a subsequent fiscal year when the
growth requirement is satisfied .
(e) Every person storing, using or otherwise consuming
in this state tangible personal property purchased at retail
shall be liable for the tax imposed by this article, and the
liability shall not be extinguished until the tax has been
paid to this state; provided, that a receipt from a retailer
maintaining a place of business in this state or a retailer
authorized by the department, under such rules as it may
prescribe, to collect the tax imposed hereby and who shall for
the purpose of this article be regarded as a retailer
maintaining a place of business in this state, given to the
purchaser in accordance with Section 40-23-67, shall be
sufficient to relieve the purchaser from further liability for
tax to which the receipt may refer.
(f) An excise tax is hereby imposed on the classes of
tangible personal property, and at the rates imposed on such
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tangible personal property, and at the rates imposed on such
classes, specified in subsections (a), (b), (c), and (d) on
the storage, use, or other consumption in the performance of a
contract in this state of any such tangible personal property,
new or used, the tax to be measured by the sales price or the
fair and reasonable market value of the tangible personal
property when put into use in this state, whichever is less;
provided, that the tax imposed by this subsection shall not
apply where the taxes imposed by subsection (a), (b), (c), or
(d) of this section apply."
Section 2. This act shall become effective on June 1,
2025.
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